Internet financial innovation should control the cost of trial and error

Since the beginning of this year, the central bank has taken the lead in launching special rectification of Internet finance. It can be said that for Internet finance, which was very popular in the past few years, the theme of 2016 is "rectification" and "regulation". Some practitioners said that Internet finance has been "stigmatized".

At the same time, the term Fin-tech has quietly become popular, and many companies are eager to distance themselves from "Internet finance" and call themselves Fin-tech companies.

Yang Kaisheng, former president of the Industrial and Commercial Bank of China , said at the "Sixth Shanghai New Finance Annual Conference and the Third Internet Finance Bund Summit" yesterday that we should abandon the pursuit of new terms and not go around in circles around terms and concepts. The innovation of Internet finance should avoid empty talk and focus on reality, and control the cost of trial and error, which should not exceed the range that society can bear.

Stop chasing new terms

Yang Kaisheng emphasized that any progress is achieved through continuous trial and error. Therefore, in the process of Internet finance development, some twists and turns and problems are inevitable. We cannot simply deny innovation for this reason, but the key is to control the cost of trial and error and not exceed the range that society can bear.

In the previous stage, some problematic platforms emerged in the field of Internet credit and financial management, and some companies absconded with the money. The E-Zhongbao incident had a huge impact on the financial order.

In this regard, Yang Kaisheng believes: "Companies and individuals who deliberately defrauded or were suspected of committing crimes should of course be dealt with by the judicial authorities in accordance with the law, but I think some of them may not have had subjective malice at first. At that time, they just thought they were standing at the forefront and that they could really take off with the wind. Their thinking methods were deviated, and they regarded the disregard and deviation from financial laws as pioneering and innovation, and they regarded deception and advocacy as marketing and publicity."

Internet finance was worshipped in the previous stage, but was quickly "stigmatized" after a series of risk events and special rectifications. Regarding the practice of replacing Internet finance with Fin-tech, Yang Kaisheng pointed out: "Some people hope to achieve a break with some of the original problems by changing the terminology, but this still does not change the one-sidedness and absolutism of the thinking method. I think it is neither necessary nor meaningful."

Some industry insiders believe that the foothold of Internet finance lies in finance, while the foothold of Fin-tech lies in technology. Yang Kaisheng pointed out that we must abandon the inexplicable pursuit of new terms, do not blindly chase fashion and catch the limelight, and see the essence of the problem through appearances. No matter what the name is, as long as it is engaged in financial business, it must follow the current financial industry rules and accept necessary financial supervision. If we still go around in circles on the terms and concepts, it will not be conducive to summarizing experience and lessons, nor will it be conducive to controlling and reducing the trial and error costs in the development process.

Blockchain development should avoid impetuousness

With the popularity of Bitcoin, the concept of blockchain has become widely known. In short, blockchain is a digital ledger with the property of being tamper-proof. Any record written into the blockchain cannot be tampered with, which is convenient for public supervision and audit. UBS has released a report saying that in the next 20 years, the impact of blockchain and related technologies on the world will be as profound as the impact of the Internet in the past 20 years.

Governments and regulators in some countries have also begun to invest considerable energy in blockchain research. Some international banks have formed a new technology alliance last year. Ping An of China is the first company in China to join the R3 distributed ledger alliance. The People's Bank of China has also stated that it will strive to launch a digital currency issued by the central bank as soon as possible.

Yang Kaisheng believes that if blockchain technology can transform the function of the Internet from information transmission to value transmission, it will have a far greater impact and change on people's economic life, financial life and even social life than Internet finance in the general sense.

But in fact, the application of blockchain in the financial field has not really started yet. It is currently applied to some social life fields, such as charity donations and medical services. Ant Financial recently applied blockchain technology to the field of charity donations. In the past, the public did not know when the money would be given to the recipients after making donations, but through public welfare projects supported by blockchain technology, every link can be publicly queried, and you can see how the donations are allocated and distributed.

Cheng Li, Chief Technology Officer of Ant Financial, told reporters: "We first applied blockchain technology to public welfare scenarios because it can increase trust. The essence of blockchain technology is to use distributed technology and consensus algorithms to reconstruct a trust mechanism. However, blockchain cannot currently support Alipay's high-frequency concurrent transactions, and Ant Financial has not thought about using blockchain technology to study virtual currency."

The advantages of blockchain technology that are often mentioned are decentralization, traceability of any activity, and direct point-to-point transactions. Yang Kaisheng pointed out that there are many factors that deserve further discussion, such as the technical standards of relevant blockchains, the format of transaction instructions, and the identity authentication and access permissions of blockchain transaction participants brought about by the real-name system for financial activities. Do we still need a centralized or quasi-centralized organization to formulate and regulate them?

"Our understanding of blockchain should no longer fall into the one-sided misunderstanding like Internet finance, thereby increasing the cost of trial and error in the development process. We should avoid the empty talk and grasp the essence of things. This is the key to reducing the trial and error costs of financial innovation," Yang Kaisheng concluded.